BANGKOK (Reuters) — Thailand is expected
to lift a state of emergency in Bangkok, almost two months after it was
imposed to quell anti-government protests, because of pressure from
businesses and in light of improving security, a top official said on
Tuesday.

Protesters trying to bring down Prime Minister Yingluck Shinawatra
and end what they see as the pervasive influence of her brother,
ousted former premier Thaksin Shinawatra, have been on the streets
for four months.

The instability is unnerving consumers, with confidence at a 12-year
low, and automakers, property firms and hotels in Southeast Asia's
second-biggest economy are feeling the pinch.

Twenty-three people have been killed, most in shootings and grenade
blasts, since late November and the bloodshed is scaring tourists
away from Bangkok.

National Security Council chief Paradorn Pattanathabutr said there
was a "very high chance" the emergency in Bangkok and surrounding
areas would be lifted soon.

"Business organizations have asked that it be lifted and the overall
situation is easing," Paradorn told reporters.

The protests are the latest turmoil to rattle a country broadly
divided between urban, middle-class supporters of the royalist
establishment and the rural supporters of former telecoms tycoon
Thaksin, mostly in the north and northeast.

Thaksin's supporters say he was the first Thai political leader to
keep campaign promises to help the poor.

His critics, who say he is the real power behind his sister's
government, say he used his wealth and taxpayers' money on wasteful
populist policies that have allowed him to commandeer a fragile
democracy.

In their bid to bring Yingluck down, the demonstrators tried to
occupy ministries and other state offices and later blocked major
Bangkok intersections. Early this month, with numbers dwindling,
they withdrew to a city park.

BLASTS

Despite the easing tension, the violence has not ended.

Three people were injured on Tuesday when an explosive device was
thrown into Lumpini Park, where the protesters have set up camp. On
Monday, a grenade was thrown near another protest. No one was hurt.

With the army not intervening to oust Yingluck, as it did in 2006
with a coup against Thaksin, the protesters are hoping the courts,
widely seen as supportive of the anti-Thaksin establishment, will
eventually bring her down.

Yingluck faces various legal challenges, with one of the potentially
most serious being a charge of dereliction of duty brought against
her by the anti-corruption agency over a rice-subsidy scheme that
has left hundreds of thousands of farmers unpaid.

A Bangkok civil court limited the government's powers on February
19, prohibiting force to crack down on protesters and stopping
authorities from banning gatherings.

Paradorn said that the ruling had removed a reason for maintaining
the emergency as it limited what the government could do under it
anyway.

A February 2 election, disrupted by protesters and boycotted by the
main opposition party, failed to resolve the impasse and left
Yingluck, whose party is likely win the vote, head of a caretaker
government with limited spending power.

The government needs voting to be completed in the 18 percent of
constituencies where it was disrupted in order to muster enough
legislators to convene parliament.

Some re-runs were held this month and the Election Commission said
on Tuesday it would hold re-runs in 11 other provinces on April 5
and 27.

Separately, the government is waiting for a Constitutional Court
ruling on what to do in 28 districts where candidates were unable to
register for the vote.

Speaking to reporters, Yingluck said the sooner voting was completed
the faster the country could move on.

"I want every side to wait for the Constitutional Court ruling. If
it comes quickly we can move toward elections quickly," said
Yingluck.

"We have wasted enough time and opportunities."

(Additional reporting by Pracha Hariraksapitak and Panarat
Thepgumpanat; editing by Robert Birsel and Simon Cameron-Moore)